Iraqi Dinar Weakens on Outlook for Budget Deficit

December 13th, 2010 at 15:04, Vladimir Vyun

Iraqi dinar slipped today on the speculation that Iraqi budget would post the deficit next year, decreasing the appeal of the currency.

The specialists predict that the budget deficit may reach $18 billion in the next year. On the other hand, the profits, which may increase because of the rising prices for the oil, can turn a deficit to a surplus by the end of 2011.

USD/IQD traded at about 1,170.00 as of 13:02 GMT after it closed yesterday at 1,169.08 and reached today the intraday low of 1,168.80.

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The IQD is pretty unpredictable. Like all the emerging market currencies (and especially oil-bound emerging markets) it should be growing in long-term, but Iraq, as an oil-exporting nation, would want to keep the IQD as cheap as possible.